VANCOUVER, Wash., Oct 24, 2007 (PrimeNewswire via COMTEX News Network) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $6.3 million for the third quarter ended September 30, 2007, an improvement of $720,000 or 12.9% over net income of $5.6 million for the third quarter of 2006. Diluted earnings per share for the 2007 third quarter were $.54, as compared to diluted earnings per share of $.48 for the same quarter a year ago.

Net revenues for the third quarter ended September 30, 2007 totaled $82.9 million, an increase of approximately $13.5 million or 19.5% over the $69.4 million for the same quarter in 2006.

($ in thousands, except (Unaudited) (Unaudited)

per share amounts) Third Quarter Ended Nine Months Ended

September 30, September 30,

------------------- -------------------

Results of Operations 2007 2006 2007 2006

-------------------------- -------- -------- -------- --------

Revenues:

Staffing services $ 43,911 $ 33,506 $101,673 $ 90,734

Professional employer

service fees 38,997 35,917 105,709 101,629

-------- -------- -------- --------

Total revenues 82,908 69,423 207,382 192,363

-------- -------- -------- --------

Cost of revenues:

Direct payroll costs 35,642 25,145 79,200 67,827

Payroll taxes and benefits 21,835 20,403 66,288 63,677

Workers' compensation 6,633 7,207 18,441 20,959

-------- -------- -------- --------

Total cost of revenues 64,110 52,755 163,929 152,463

-------- -------- -------- --------

Gross margin 18,798 16,668 43,453 39,900

Selling, general and

administrative expenses 9,530 8,362 24,645 23,464

Depreciation and

amortization 350 335 1,015 965

-------- -------- -------- --------

Income from operations 8,918 7,971 17,793 15,471

Other income, net 776 733 2,351 2,035

-------- -------- -------- --------

Income before taxes 9,694 8,704 20,144 17,506

Provision for income taxes 3,412 3,142 7,253 6,399

-------- -------- -------- --------

Net income $ 6,282 $ 5,562 $ 12,891 $ 11,107

-------- -------- -------- --------

Basic earnings per share $ .56 $ .49 $ 1.14 $ .99

-------- -------- -------- --------

Weighted average basic

shares outstanding 11,276 11,247 11,265 11,176

-------- -------- -------- --------

Diluted earnings per share $ .54 $ .48 $ 1.10 $ .95

-------- -------- -------- --------

Weighted average diluted

shares outstanding 11,691 11,659 11,687 11,668

-------- -------- -------- --------

The Company reports its Professional Employer Organization services ("PEO") revenues on a net basis because it is not the primary obligor for the services provided by the Company's PEO clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with generally accepted accounting principles ("GAAP"), is presented for comparison purposes and because management believes such information is more informative as to the level of the Company's business activity and more useful in managing its operations.

(Unaudited) (Unaudited)

Third Quarter Ended Nine Months Ended

(in thousands) September 30, September 30,

------------------- -------------------

2007 2006 2007 2006

-------- -------- -------- --------

Revenues:

Staffing services $ 43,911 $ 33,506 $101,673 $ 90,734

Professional employer

services 252,855 240,314 720,325 675,833

-------- -------- -------- --------

Total revenues 296,766 273,820 821,998 766,567

-------- -------- -------- ---------

Cost of revenues:

Direct payroll costs 247,934 228,643 689,167 638,855

Payroll taxes and

benefits 21,835 20,403 66,288 63,677

Workers' compensation 8,199 8,106 23,090 24,135

-------- -------- -------- --------

Total cost of revenues 277,968 257,152 778,545 726,667

-------- -------- -------- --------

Gross margin $ 18,798 $ 16,668 $ 43,453 $ 39,900

-------- -------- -------- --------

Gross revenues of $296.8 million for the third quarter ended September 30, 2007 rose 8.4% over the similar period in 2006. For the first nine months of 2007, gross revenues of $822.0 million increased 7.2% over the comparable 2006 period.

A reconciliation of non-GAAP gross revenues to net revenues is as follows:

For the third quarters ended September 30, 2007 and 2006:

(Unaudited)

Three Months Ended September 30,

---------------------------------------------------------

(in Gross Revenue Net Revenue

thousands) Reporting Method Reclassification Reporting Method

----------------- -------------------- -----------------

2007 2006 2007 2006 2007 2006

-------- -------- --------- --------- -------- --------

Revenues:

Staffing

services $ 43,911 $ 33,506 $ -- $ -- $ 43,911 $ 33,506

Professional

employer

services 252,855 240,314 (213,858) (204,397) 38,997 35,917

-------- -------- --------- --------- -------- --------

Total

revenues $296,766 $273,820 $(213,858) $(204,397) $ 82,908 $ 69,423

-------- -------- --------- --------- -------- --------

Cost of

revenues $277,968 $257,152 $(213,858) $(204,397) $ 64,110 $ 52,755

-------- -------- --------- --------- -------- --------

For the nine months ended September 30, 2007 and 2006:

(Unaudited)

Nine Months Ended September 30,

---------------------------------------------------------

(in Gross Revenue Net Revenue

thousands) Reporting Method Reclassification Reporting Method

----------------- -------------------- -----------------

2007 2006 2007 2006 2007 2006

-------- -------- --------- --------- -------- --------

Revenues:

Staffing

services $101,673 $ 90,734 $ -- $ -- $101,673 $ 90,734

Professional

employer

services 720,325 675,833 (614,616) (574,204) 105,709 101,629

-------- -------- --------- --------- -------- --------

Total

revenues $821,998 $766,567 $(614,616) $(574,204) $207,382 $192,363

-------- -------- --------- --------- -------- --------

Cost of

revenues $778,545 $726,667 $(614,616) $(574,204) $163,929 $152,463

-------- -------- --------- --------- -------- --------

William W. Sherertz, President and Chief Executive Officer, commented: "Our third quarter operating results represent record-level performance in terms of both revenues and earnings."

The following summarizes the unaudited consolidated balance sheets at September 30, 2007 and December 31, 2006.

September 30, December 31,

(in thousands) 2007 2006

-------- --------

Assets

------

Current assets:

Cash and cash equivalents $ 57,638 $ 69,874

Marketable securities 2,591 3,159

Trade accounts receivable, net 45,339 31,328

Prepaid expenses and other 1,903 1,940

Deferred income taxes 4,251 4,699

Workers' compensation receivables for

insured claims 225 225

-------- --------

Total current assets 111,947 111,225

Marketable securities 414 406

Goodwill, net 39,859 27,536

Intangibles, net 111 75

Property, equipment and software, net 16,039 13,502

Restricted marketable securities and workers'

compensation deposits 3,096 2,616

Other assets 1,506 2,143

Workers' compensation receivables for

insured claims 4,270 4,678

-------- --------

$177,242 $162,181

-------- --------

Liabilities and Stockholders' Equity

------------------------------------

Current liabilities:

Accounts payable $ 968 $ 1,545

Accrued payroll, payroll taxes and related

benefits 38,262 33,372

Income taxes payable 890 --

Other accrued liabilities 1,037 516

Workers' compensation claims liabilities 3,690 3,843

Workers' compensation claims liabilities for

insured claims 225 225

Safety incentives liabilities 8,065 7,519

-------- --------

Total current liabilities 53,137 47,020

Customer deposits 711 817

Long-term workers' compensation claims

liabilities 3,020 5,295

Long-term workers' compensation liabilities

for insured claims 2,906 3,011

Deferred income taxes 2,965 1,545

Deferred gain on sale and leaseback 701 793

Stockholders' equity 113,802 103,700

-------- --------

$177,242 $162,181

-------- --------

Outlook for Fourth Quarter 2007

The Company also disclosed today limited financial guidance with respect to its operating results for the fourth quarter ending December 31, 2007. The Company expects gross revenues for the fourth quarter of 2007 to range from $285 million to $290 million, as compared to $274 million for the fourth quarter of 2006, and anticipates diluted earnings per share for the fourth quarter of 2007 to range from $.45 to $.48 per share, as compared to $.45 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the fourth quarter of 2007 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On October 25 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss third quarter 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 21000117. The conference call will also be webcast live at www.barrettbusiness.com. To access the webcast, click on the Investor Relations section of the Web site and select Webcast. A replay of the call will be available beginning Thursday, October 25, 2007 at 12:00 p.m. PT and ending on November 1, 2007. To listen to the recording, dial (800) 642-1687 and enter conference identification code 21000117.

Statements in this release about future events or performance, including earnings expectations for the fourth quarter of 2007, are forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could affect future results include economic conditions in the Company's service areas, the effect of changes in the Company's mix of services on gross margin, the Company's ability to successfully integrate acquired businesses with its existing operations, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of its primary markets and the collectibility of accounts receivable, among others. Other important factors that may affect the Company's future prospects are described in the Company's 2006 Annual Report on Form 10-K. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements may be less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this release to reflect events or changes in circumstances that occur after the date of this release.

BBSI provides a comprehensive range of human resource management solutions to large and small companies throughout many regions of the United States.

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